Startup Funding Espresso – Equity Distribution Over Funding Rounds

Equity Distribution Over Funding Rounds

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

As the startup raises funding the founder's and employees' ownership stake will fall and the investor's stake will rise. 

This is due to the fact that more investors are added to the cap table over each round of funding.

Both founders and employees undergo dilution throughout this process.

After a seed round the founders typically own 65% of the company, employees own 15%, and investors own 20%.

After a Series A round the founders typically own 45%, employees own 12%, and investors own 43%.

After a Series B round the founders typically own 35%, employees own 10% and investors own 55%.

After a Series C round the founders typically own 30%, employees own 5% and investors own 65%.

After a Series D round the founders typically own 20%, employees own 3% and investors own 77%.

In startups with more rounds of funding, it’s not uncommon for founders and employees to own single-digit percentages of the company.

Consider the impact of additional rounds of funding on both founder and employee ownership.

 

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.

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